How do TV companies make money?

alcomoholic

I recently finished boardwalk empire, and on wikipedia it says that episode one cost 50 million to make.

and i just wondered, i dont know exactly how much a HBO subscription costs, or i dont know how much an advertising slot costs on HBO during a show like BE, but if one episode alone costs 50 million, how on earth can they make a profit from producing a whole series of it? and obviously they have F**kloads of shows being produced at any one time, each again probably costing millions to produce.

and i mean they dont have the revenue that one would get from cinema tickets if it was a movie, and i cant imagine there's much merchandise sales aside from the box sets (which surely cant generate much money in this era when everyone and anyone downloads)

so just wondering, if anyone knows.
thanks

3DataModem

Syndication. Advertising.

How much do you think HBO get for each ad break? Plus repeats? About eight ad breaks per episode.

Then RTE pays HBO to syndicate the Sopranos, as does hundreds of other channels. Plus DVD sales.

Also the 50m is for the pilot and includes development costs. Subsequent eps are a lot less (sets built, script in place, etc).

Well HBO is totally privately funded, I think, so somebody must fork in the money. I have not seen the station personally, so I don't know if they show advertisements, but I would be very surprised if they do. Plus it's likely that the subscription costs more than cover it, considering there might be millions of subscribers.

In the last quarter of 2010, there were 28.6 million subscribers, apparently.

amacachi

I doubt the rest of the season cost more than about 10 million because tbh if it did then it wouldn't work, I think the huge budget for the pilot was played up massively. There wouldn't have been 50 million spent on a pilot unless it was going to get picked up so by skewing all the payments and costs as being "upfront" they made the budget seem higher than it would've been.

Anyway, HBO subscriptions are expensive enough and with the way the US TV subscriptions work (as with all else in the US) it's the indirect costs that get you. I think the HBO package is under 20 dollars a month but the carriers require people to take an expensive package alongside it. HBO has something like 30 million subscribers in the US so even at just a tenner a month that's a pretty damn big turnover!
Add in some advertising, massive overseas sales and DVD/Blu-ray and you see how they make money.

amacachi

amacachi wrote: »

I doubt the rest of the season cost more than about 10 million because tbh if it did then it wouldn't work, I think the huge budget for the pilot was played up massively. There wouldn't have been 50 million spent on a pilot unless it was going to get picked up so by skewing all the payments and costs as being "upfront" they made the budget seem higher than it would've been.

Anyway, HBO subscriptions are expensive enough and with the way the US TV subscriptions work (as with all else in the US) it's the indirect costs that get you. I think the HBO package is under 20 dollars a month but the carriers require people to take an expensive package alongside it. HBO has something like 30 million subscribers in the US so even at just a tenner a month that's a pretty damn big turnover!
Add in some advertising, massive overseas sales and DVD/Blu-ray and you see how they make money.

I was looking into that, actually, apparently HBO requires a certain type of package, which costs around $100 once you've added in HBO.

RolandIRL

HBO have no advertisements during an episode...every episode is around the 55/27min mark compared to the 42/21 min for network shows, so it must all be from subscriptions. they also have PPV sports events so that must bring in a far bit

amacachi

Deleted User wrote: »

I was looking into that, actually, apparently HBO requires a certain type of package, which costs around $100 once you've added in HBO.

Aye, it's like just about everything in America, I can't understand how it's allowed under competition law etc.

Even just taking the "direct" HBO subscription cost at a lowball of a tenner a month gives them a turnover of about $3billon per year. Add in DVD sales and foreign TV sales. Also I'm not sure what the story is with boxing and the like or what HBO shows or if it's included in some subscriptions but I think a few recent fights have made over a billion in PPV sales in the US alone.

Dman001

Wikipedia states that they have 28.6 Million subscribers. I've heard they charge about $12 a month, but may depend on the satellite/Cable provider. So, for arguements sake, say they charge on average $10 a month. That's $286 Million they get in monthly revenue. Plus you have DVD Sales, VOD Sales (iTunes and the likes) and sale of International TV rights.

Kensington

They charge between $7 and $13 per month, depending on chosen package and the operator. HBO also operate CineMax, another premium service for $13 a month. They've some 41 million subscribers between the two.
Then they flog their programs internationally e.g. sky paid £150 million for the entire HBO back catalogue last year, RTÉ/BBC/Ch4 etc. must buy in the programmes to show.
Then there's DVD sales, BluRay, iTunes rentals and purchases, PPV boxing and UFC.

As for the money for productions, well their parent, TimeWarner, had revenues of some $27 billion in 2010 :eek:

They make a lot of money, but they certainly deserve it - they have produced possibly some of the best shows in the past 2 decades.

mikemac

Private company, they take big risks and if they spend tens of millions on a series and it fails it's their loss.
So well done to them if they can make a profit.

Boxsets are a money spinner.
Design it once, produce it and you'll sell tens of thousands of copies all at over 20 or 30 dollars or so.
Sell to RTÉ and international channels and rent with itunes.

Money can be made but it's not easy and it's a ruthless environment.